Big data is big buzz these days. Companies now track millions of retail transactions, even exchanges in open social media, every day to learn as much as possible about their customers’ behaviour. Many are using that information to develop new pricing strategies to bolster their bottom line.

Yuri Levin, a Distinguished Professor of Management Science and Operations Management in the Queen’s School of Business, is an expert in how massive sets of customer data can be used to strategically set prices, a practice known as “revenue management.”

“Revenue management is about charging the right price to the right customer at the right time,” says Levin. “The idea is that different customers will pay different amounts for the same or similar products, so companies can come up with a segmentation structure and people pay what they are willing to pay.”

It’s an idea pioneered by the airlines, which have long charged different fares to different passengers based on when they fly, how far in advance they purchase, and an array of other factors. But the practice has spread to many other industries in recent years, driven by the availability of data from the proliferation of e-commerce, electronic payments and loyalty cards.

In the good old days they used to give you a loyalty card to make sure that you come back, these days they give you a loyalty card in order to track every single transaction you do with them,” says Levin. “They can use this information to micro-market to you, for example, by sending personalized coupons based on your shopping habits.”

Levin has published widely on revenue management and also consults for companies on pricing strategies. His recent work with the Molson–Coors Brewing Company saw him and his collaborators tackle the complex problem of how lowering the price of a certain kind of beer would impact its sales, as well as sales of the company’s other beers at similar price points. They analyzed large data sets and created a pricing strategy model to maximize revenues. The results earned Levin and his team the prestigious 2013 INFORMS Revenue Management and Pricing Practice Award.

His research also delves into the emerging issue of how consumers change their behaviour in response to complex pricing strategies. He recently co-authored a paper that examined the benefits to consumers of sharing information and cooperating in name-your-own-price situations, such as bidding on hotel rooms with companies like Priceline.

“The rise of social networking can help consumers share information and figure out a company’s pricing patterns,” says Levin. “So just as businesses become more sophisticated, so too do consumers. So there is a game going on and it’s interesting to see how this game will play out.”

Levin is quick to point out that data alone can’t drive a business plan. You need talent to get from the raw numbers to the insight needed to create an effective strategy.

As the director of the School of Business’s new Masters of Management Analytics Program and an active teacher in the school’s MBA program, Levin is doing his part to help future managers leverage big data. His skill in the classroom has twice won him the MBA Professor of the Year Award, an accolade which Levin attributes to how closely his research and consulting work informs his teaching, and vice-versa.

In the classroom I don’t just talk about abstract theoretical concepts, I try to relate them to problems that companies are facing,” says Levin. “And in turn my research and consulting work benefits from my experience in the classroom, learning from our very sharp MBA students about the challenges they have faced within their companies.”

Levin hopes his students will leave the classroom with the understanding that revenue management isn’t just good for business, it is good for consumers, too.

“It sounds like companies are just trying to get more money from regular consumers, but at the end of the day, it’s a win-win, since consumers can end up paying less,” says Levin. “It’s more about understanding and being able to offer what each individual consumer is looking for in the market.”

Learn more about Yuri Levin's research